Engage legal counsel to enforce risk insurance policies and provide pandemic coverage
Health systems need to proactively engage with legal counsel to discuss applicable insurance policies. While some business disruption insurance policies require damage to physical plant, others only require substantial damage to the business, not citing the physical damage requirement. Further, some institutions have pandemic and/or “act of God” insurance.
While insurance claims are likely to face scrutiny from the insurers’ adjudication process, some insurers may look to quickly settle claims and move forward — creating an opportunity for a faster financial rebound for all involved.
Collaborate with financial partners, payer partners and government agencies to address liquidity issues
Health systems sought funding from government relief programs, such as the Federal Emergency Management Agency and the Coronavirus Aid, Recovery, and Economic Security Act, but also importantly needed to stand up rigorous documentation protocols and controls in order to meet reporting requirements assigned to these funds. Engaging with business or consulting partners who were experienced with government filings is critical to maximizing reimbursement.
Health systems have prioritized working with America’s Health Insurance Plans (AHIP), state agencies (e.g., Medicaid), and their commercial managed care partners to negotiate and settle COVID-19-related insurance claims. For Affordable Care Act and Medicaid patients, this sometimes means negotiating settlements on a state-by-state, county-by-county or even case-by-case basis for high-dollar claims.
Additionally, health systems worked together to ask the state for a reprieve from risk-based arrangements — such as the federal reprieves for accountable care organizations and other risk-bearing arrangements. Additionally, organizations have sought and continue to seek state approval for payers to a portion of their financial reserves for prospective payments to health systems for COVID-19 related care given the lengthy and complicated claims submission and adjudication process.
Forgo traditional budgeting and forecasting methodologies and adapt an iterative, nimble budget and forecasting model
Traditional budgeting and forecasting methodologies are proving ineffective and may have to be replaced by more nimble and agile-type forecasts — and best-, medium- and worst-case scenarios. Many suggested that revisiting forecasts on a weekly basis may be a best management tactic (although it is also important to weigh the effort against the benefit derived). Perhaps less intensive and more frequent forecast updates are preferable.
Paying close attention to payer mix shifts as well as volume impacts will allow for better forecasts. Formerly complicated and activity-intensive forecasts may have to be replaced by more nimble and agile-type forecasts. Sensitivity analysis and best-, medium- and worst-case scenario modeling allows for more productive conversations during these times.